What is the timeframe within which the Representative of a deceased or mentally incompetent person with a Controlling Ownership Interest in a Caption By Hyatt franchise must transfer the Owner's interest?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.7 Transfers of Equity Interest Upon Death.
Upon the death or mental incompetency of a person with a Controlling Ownership Interest in Franchisee or one of its Controlling Owners, that person's executor, administrator, or personal representative ("Representative") must, within six (6) months after the date of death or mental incompetency, transfer the Owner's interest in Franchisee or the Controlling Owner to a third party or to the other Owner(s) of Franchisee, if any, subject to the conditions set forth in Section 12.4(a), 12.4(b), and 12.4(f) above, and provided that at least one Guarantor that satisfies the Guarantor Monetary Threshold (as it may be increased in accordance with Exhibit B-1).
In the case of a transfer by devise or inheritance, if the heirs or beneficiaries cannot meet the foregoing conditions within this six (6)-month period, the Representative will have twelve (12) months from the date of death or mental incompetency to dispose of the interest in accordance with this Section 12.7.
If this required transfer does not occur within the required timeframe, Hyatt shall have the right to terminate this Agreement upon written notice to Franchisee, provided that Franchisee will not be liable for liquidated damages pursuant to Section 16.5 or Brand Damages in connection with such termination.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, if a person with a Controlling Ownership Interest in a Caption By Hyatt franchise or one of its Controlling Owners dies or becomes mentally incompetent, their Representative has a specific timeframe to transfer the Owner's interest. The Representative, who is the executor, administrator, or personal representative, must transfer the Owner's interest within six months from the date of death or mental incompetency. This transfer can be to a third party or to the other existing owners of the Franchisee.
However, there is an exception to this rule. In cases where the transfer is happening through inheritance, and the heirs or beneficiaries cannot meet the standard conditions for transfer within the initial six-month period, the Representative is granted an extension. In this situation, the Representative has a total of twelve months from the date of death or mental incompetency to dispose of the interest.
These transfers are subject to certain conditions outlined in other sections of the franchise agreement, specifically Sections 12.4(a), 12.4(b), and 12.4(f), and require that at least one Guarantor meets the Guarantor Monetary Threshold. If the transfer does not occur within the specified timeframe, Caption By Hyatt has the right to terminate the franchise agreement, although the Franchisee will not be liable for liquidated damages or brand damages in connection with such termination.